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Huawei, through its chip design arm HiSilicon and manufacturing partner Semiconductor Manufacturing International Corp. (SMIC), is targeting production of roughly 600,000 Ascend 910C AI accelerator chips in 2026. That would represent a doubling of previous output levels, part of a broader ambition to churn out 1.6 million chips despite persistent yield challenges and memory constraints.
The company recently unveiled two concepts that signal its strategic direction: the “Tau Scaling Law” and “LogicFolding” architecture. Both prioritize advanced packaging and efficient data movement over the geometric scaling that has defined the semiconductor industry for decades. The company claims this approach could achieve transistor densities comparable to a 1.4nm process by 2031, all without relying on the restricted foreign lithography tools that Washington has tried to keep out of Chinese hands.
Thermal management and power efficiency are significant hurdles that grow exponentially harder as you pack more transistors into tighter spaces, regardless of how you arrange them.
DeepSeek has placed an order for at least 160,000 next-generation Ascend 950DT accelerators, slated for deployment in a 1-gigawatt data center by late 2027 or early 2028.
According to Bernstein, the investment research firm, Huawei is expected to capture approximately 50% of China’s AI chip market by 2026. Nvidia’s market share in China is predicted to collapse from 40% in 2025 to just 8% in 2026.
SMIC operates without access to ASML’s most advanced lithography systems, which means its process technology lags behind Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung by at least a generation in traditional terms. Huawei’s LogicFolding approach is essentially an engineering workaround designed to close that gap through architecture rather than raw process node advantages. SMIC’s stock has seen considerable appreciation tied to Huawei’s architecture announcements.
Investors watching this space should pay close attention to SMIC’s yield rates over the next 12 months. Production targets are ambitious, but hitting 600,000 Ascend 910C chips requires manufacturing consistency that SMIC has not yet demonstrated at this process complexity.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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